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Groans greet Eskom's 2018 increase

Eskom. File Photo
Eskom. File Photo

Eskom's increase of 5.23% for the 2018/2019 financial year‚ approved by the National Energy Regulator of South Africa (Nersa) on Friday‚ has been greeted with "disappointment and anger" by the Congress of South African Trade Unions and a plea for a structural adjustment program of the entire electricity sector from the Chamber of Mines.

Sizwe Pamla‚ Cosatu's national spokesperson‚ said: "While we welcome the rejection of the requested 19‚9% increase by Eskom‚ we still are concerned by this trend of using high electricity tariffs to plug holes and cover for Eskom’s wasteful management and corruption".

"Workers and their families have already been slapped with increases in fuel‚ food and other basic services like health. So consumers can’t afford any further increases in the cost of living and will be devastated by this latest blow from Eskom‚ which will plunge even more people into poverty.

"In the long-run the tariff increases will have even more serious consequences for the economy‚" said Pamla.

"Electricity is a major part of the running costs of nearly all companies. Many will become unviable and start to retrench workers and fewer new businesses will get started.

"This will slow down economic growth even further and have a catastrophic impact on an already limping economy with high levels of unemployment."

Chamber of Mines chief economist‚ Henk Langenhoven‚ said electricity costs continue to be the fastest growing component of the mining sector’s cost base‚ having increased by more than 300% over the past eight years.

“The mining sector continues to be under significant pressure with‚ for example‚ 65% of platinum mines are currently loss-making. We have already seen a number of instances where mining companies have been forced to restructure to ensure their survival‚ with the number of people employed in the industry declining by 70‚000 (14%) between 2012 and 2016 alone. Should current conditions in the sector persist‚ and in the absence of cost pressures abating (including electricity tariffs)‚ mining operations will be pushed further into the red which‚ in turn‚ will necessitate further restructuring.

“It is our view‚ however‚ that this short-term measure must be followed by the design and implementation of a structural adjustment program of the entire electricity sector where Eskom would only be one of a range of suppliers of electricity‚" he said.

Without the finalisation of the Integrated Resource Plan‚ Langenhoven said‚ ensuring an economically viable energy supply for the country‚ "Eskom will continue to be in danger of failing".

"Neither the country’s energy users nor its taxpayers can afford such an outcome.

"Without governance being restored at the utility it will become almost impossible to source funding to sustain the operations of Eskom‚” Langenhoven said.

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